All perfect praise be to Allaah, The Lord of the Worlds. I testify that there is none worthy of worship except Allaah, and that Muhammad is His slave and Messenger. We ask Allaah to exalt his mention as well as that of his family and all his companions.
It is not permissible for a Muslim whom Allaah entrusted to handle the affairs of Muslims to appoint other than competent and trustworthy men who are responsible people and who can fulfil their duties to the best of their ability in handling Zakat affairs or anything else. Such people must know that they are responsible for whatever they are entrusted with in front of the people and in before Allaah on the Day of Judgement. Allaah, The Exalted, illustrated the characteristics which a responsible man must have. Allaah Says (which means): {… Verily, the best of men for you to hire is the strong, the trustworthy.}[Quran 28:26].
Therefore, whoever is confirmed to take the money of the public without right, it is not permissible to appoint him to handle Zakat, as this is losing the trust and appointing the tasks to other than those who deserve them. This is something which the Prophet warned us against.
The fact that a person is leading the congregation in prayer, or that he is loved by people, or performs I'tikaaf (to reside in the mosque for worship and devotion to Allaah for a set period), or does other acts of worship, are not a criteria to hold positions of responsibilities and handle the affairs of the Muslims.
Abu Tharr was truthful and he was one of the best companions of the Prophet yet when he asked the Prophet to run the affairs of the Muslims, the latter replied: "You are weak, and this is a trust; on the Day of Judgement it will be a disgrace and a regret except for the one who takes it firmly and does what he should do." [Muslim]
Furthermore, the Prophet said: "We do not appoint people who ask to hold the positions of responsibilities." [Al-Bukhari and Muslim]
Therefore, we do not advise you to appoint the said person or those like him to handle money affairs as this is betraying the trust and putting the responsibility in the hands of those who do not deserve it, and thus exposing the Zakat of the Muslims to be spoilt.
If other members want to appoint him, then you have to explain to them the reason why you object in a friendly and respectful way without hurting the feelings of anyone or backbiting him.
Exposing the truth in a nice and respectful way in such a situation is not a slander nor is it a dispraised backbiting, rather it is an advice which is the basis or religion.
Finally, it should be noted that one must maintain respect to the person who is not eligible for positions of responsibility, and one should keep relationship with him and put him in another position that would suit him.
Allaah Knows best.